Success story of Redbus.in through effective market positioning and product differentiation strategy

1. Redbus.in: A Successful Venture of 21st
Century
INTRODUCTION
RedBus.in founded by 3 alumini of BITS Pilani, Phanindra Sama, Charan Padmaraju and Sudhakar
Pasupunuri is India's largest online bus ticketing platform founded in 2005 and is a part of ibiboGroup,
trusted by over 4.5 millionIndians. With a sale of over 4,00,00,000 tickets via web, mobile,and our bus
agents,RedBus.instandsatthe top of the game inbusticketing.Redbus.inoperatesonover67000 routes
and isassociatedwith1800 reputedbusoperators.Anotherproductistheircloudbasedsoftware,called
BOSS and Seat seller to bus operators and travel agents.
Redbus.in entered with a strong Market Research which involved even Bus Operators, Consumers,
Venture Capitalistsanddiscussingtheirideawiththemwhichgotfavorableresponse fromdifferentkinds
of workingpeople.Thismade themprepare a code (forthe software),anelaborate B-Planand gone for
searchof mentorstogive life tothe idea.TiE-IndusEntrepreneurs,Bangalore chapterbreathelife intheir
idea.Theystartedworkingon Redbus.Thoughtheyhave got few ups and downs,struggledfor changing
the mindset of people, things settled in place within few months. It provided one platform for the bus
agencies and the people to book tickets even at the last time showing available seats instead of travel
agencyselection. Sothatpeoplecanfindagencies,bustype andconvenienttimings totravelwith.10,000
travel agents use seat seller, an inventory distribution platform for agents to sell bus tickets.
POSITIONING
Redbus.in notonlyprovided ticketbookingthroughPC,butalso movedbeyondprovidingvalue overthe
internet by reaching out customers using all media like phone, Home delivery, and Physical outlets and
throughSMS whichisfeasible forthe customers.The word-of-mouthisthe onlymarketingstrategythey
used to publicize Redbus.in and this has been working out for their fair competent work, learning from
mistakes. Taking seriously the feedback of the customers to rectify the mistakes built strong bonding
between customers and companies.

2. The strong Market Research on the idea, Strong Technical Background that were used for the idea
implementation,innovative BusinessPlan,Mentors,Aimingforthe customer satisfaction,update of the
work process and above all the First ever Idea to implement in India made Redbus.in a Successful start-
up. Though they have competitors like Bookbusnow.com, matus, abhibus, seatsselect.in, simplybus,
igoezy.comRedbus.instood firstinthe priorityplace fromthe side of customersand alsoin the market.
The reason for this is just that none of the other companies have the convenience or bandwidth of
redbus.in offerings that combine consumers, operators & Travel agents.
Solving a fundamental pain point: The Indian bus industry operated in a fashion that can be best
described as chaotic. With no, central database of seat availabilityand bus routes, relying on a network
of travel agentstohandle bookings. Agentsare givenquotasof seats fromthe busoperators, theyinform
the buscompanybyphoneeachtimeaseatissoldtoapassenger.Apartfromthisthere werenopublished
fares and the customers have to pay whatever the agents fancy. The agents did not have information
about the seats allotted to other agents and thus many a times some seats would go empty.
This chaos was what the redBus.in team set out to simplify by providing a central database of seats and
busoperators,onlineticketingandofflineticketdistributionnetwork.Theysimplyprovidedthe customers
a one stop shop for all their bus ticketing needs. All the information that they required was at now
accessible tothe consumersatthe time of booking,makingthe complete process,transparent,quickand
hassle free for the consumer. On the other hand they also helped the bus operators keep a track of the
seatssoldin a centralizedmanner.Thisholisticapproachto solvingthe macro and microissuesfacedby
this industry has been one of the major reasons of their success.
Customer’s First: RedBus.in started out with 2 operators and a daily inventoryof 10 seats covering two
routes and has now grown to offer ticket inventory across 12,000 routes for more than 1,000 bus
operators in 24 Indian cities (as of Jun 17 2013). Having a zero offline marketingexpenditure,they have
beenable toachievethissolelyviawordof mouthpublicityandcustomersatisfaction.Inthe wordsof the
founder“.We workedonconversionrate;customersatisfaction;buildingstrongtechnologyarchitecture.
All thiswasa greatIP whichformedastrongfoundationforwhatwe are today.”The companypractically
forcedthe busoperatorstoacceptanSMSticketreceiptaspaymentjustbecauseitwouldprovideabetter
customerexperience.The teamknowsthatunlessthepeoplefeelgoodwhile usingtheservice,theywon’t
be a returncustomer.Customerretentionissomethingthattheyworkonactively.Apologizingincase of
a screw-up,provide individual attentionincase of any issue the customerhas, and then workingdoubly
hard to fix the issue is what makes the customers trust the company with their travel plans.

3. Innovative Thinking: The buslinesneededto sell seats.SoRedbus.inbuiltasite,andboughtthe inventory
itself fromthe bus linestoliston the site.Once itprovedit couldmove seats,the operatorswere happy
topaythe companyapercentage of seatssoldascommission. Justunder50% of Redbus.inrevenuecomes
from the Net,much of the rest is viamobile phones.The companyreducedthe dependencyonthe web
by building its own network of bike couriers to deliver tickets and take payments, and by setting by 7
different call centers throughout India.
Moonshot Thinking: The team of redBus.inenteredacompletelydisorganizedmarket,andaimedtoset
it inorder.With nothingalreadyexistingtoassistthem, theypracticallyhadto buildeverythingfromthe
ground-up all the while without disrupting how the bus operators operated fundamentally. Redbus.in
venturedintocloudbasedsoftware service –BOSS(Bus operator software service) forthe Bus operator
with a technology that can help them better allocate drivers and seating arrangements and seat seller
software forbetterorganizingof theirclientele andprovidestandardratesandassured seatavailability.
PRICING
Pricing is the process of determining what a company will receive exchange for its product or service.
Pricingisafundamentalaspect of financial modelingandisoneof the fourPsof the marketingmix.Pricing
is also directly linked with the demand.
The initial idea of RedBus.in to set up a site that allowed customers to book bus tickets in a location-
independentmanner,wastriggeredbyPhanindra’s inabilitytovisithisfamilydue to lack of an available
bus ticket. The pricing strategy used by RedBus.in was dynamic pricing which helped the businessset
flexible prices for the services based on market demands. In Gujarat, RedBus.in offers cheap tickets
starting at Rs.99, across five operators and 12 routes, when booked more than seven days in advance.
Redbus.increateditsownpricingmodel.Theycharge some % of the amount paidbyacustomerfora bus
ticket as commission from the bus operators. Hence,more the bookedtickets, more the commission&
more the profit. We know that when the price is constant, demand increases. RedBus.in never hike
commission,justmatchthe amountcustomerspay to offline agents. A well-chosenprice shouldsupport
a product's marketpositioningandbe consistentwiththe othervariablesinthe marketingmix.RedBus.in
improved theirwebsite,makingitmore userfriendly whichincreasedtheirlook-to-bookconversionrate
(RedBus.in look-to-book conversion rate is 4-5 times higher than other online travel sites like Yatra,
Cleartrip, etc.).

4. Price isinfluencedbythe type of distributionchannel used,the type of promotionsused,andthe quality
of the product.Redbus.ininvestedveryless almostnone onadvertisements.Itclaimsto have neverrun
an advertising campaign, preferring to rely on word-of-mouth through its largely loyal customer base.
Hence, adding the advertisement cost to profit.
CONCLUSION
 Redbus.in identifiedandcreatedmarketnichesthathave not beenadequatelyfilled
 Handles reservationsanddriverallocations
 Increase occupancyrate andreduce emptybuses
 Whento reduce andincrease prices
 Database of customers
 Dynamicspricing
 Transparencyand customerassurance andtrust
 Operatorsowning computerized systems–Redbus.insoftware interfaces - integrateswith
operatorsinventory forothers,Redbus.inin-house BOSS(busoperatorsoftware service)
TechnologiesFactors:
 Online reservations
 Provide variousinformationonbustrips,routesandfares
 Provide service onmobile platform
 Introduce BPOand voice operations
 Bookonline usingcredit,debitcardsand netbanking
 updatedonline database
 paperlessticketingwithm-Ticket
ManagementFactors:
 Pan Indiaoperations
 Createda niche market
 partnership acrossbusoperatorspan India
 Transparency

5.  BookSears
 Wide options
 ReturnTickets withStandardRates
Achievements:
 Forbestop5 Hotteststart-ups
 Businessworld - Top3 enterprisesinIndia
 All worldNetwork –India’sfastestgrowingcompany
 Deloitte - Top5 fastestgrowingcompaniesinIndia
 Star Awardachiever- Youth marketingforum
 IAMAI - Internetstartupof the year 2006